Abstract Psychosis is a serious mental disorder involving disruptions in neural processing that are poorly understood. In addition to disrupted cognition, abnormal sensory processing is also found in psychosis, including distorted perception and hallucinations. This proposal will apply tools from visual neuroscience in order to gain insight into the neural basis of abnormal visual perception in psychosis. Because visual neural circuits are well- understood in animal models, we will be able to test a very specific hypothesis about the nature of visual circuit disruptions in psychosis; that this disorder is associated with abnormally weak early visual gain control. Gain control is a neural process that prevents responses to strong visual stimuli from becoming too large. It is known that in psychosis, some visual illusions are perceived as weaker than in healthy adults due to abnormally weak gain control. We will use a visual paradigm designed to tap into particular neural circuits in combination with EEG, in order to pinpoint the neural basis of this visual abnormality. In addition, we will acquire longitudinal measures of visual gain control and psychosis symptoms, in order to test the hypothesis that weaker gain control is associated with clinical deterioration. Finally, using functional MR spectroscopy, we will examine the role of glutamate in occipital cortex during visual processing in psychosis. This work will elucidate the pathophysiological mechanisms of psychosis, thereby facilitating the development of more precisely targeted, etiologically-based treatments.